Jeff Smulyan turned 65 in 2012, but the three-year employment agreement he just signed shows he’s living up to his pledge that he has no intention of retiring.
That’s great news for his fans, who praise him for repositioning Emmis—and keeping it afloat—during a harrowing stretch for the media industry. A series of asset sales and financial maneuvers have transformed the company’s balance sheet over the past 12 months, pushing the stock price up 162 percent, to $1.89.
But Smulyan, Emmis’ CEO and founder, has his detractors, as well, who look askance at the fat pay packages he’s collected over most of the past decade, even as the company’s stock price swooned from the $20s.
Smulyan, whose company has a market value of $74 million, earned $2.8 million in Emmis’ last fiscal year, the most of any executive at a Hoosier public company with a market value of less than $250 million, IBJ’s executive pay database shows.
The numbers Emmis reports for Smulyan for the fiscal year that ends next month are sure to be robust, as well, in part because of special, one-time payments he received in recent months.
After Emmis sold a Los Angeles radio station for $85 million last fall, the board doled out $2.8 million in “transaction bonuses,” including $618,750 for Smulyan.
And when Smulyan signed his new employment agreement on Dec. 26, the board gave him a $700,000 signing bonus and forgave a $1.2 million personal loan that had been outstanding for about two decades.
Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, isn’t impressed.
He called it “very odd” for a company to pay a signing bonus to an existing executive. He also questioned the transaction bonus, since Smulyan already was receiving a healthy paycheck for doing his job.
Elson noted that Emmis has two classes of stock—one held by Smulyan with extra voting power and another held by remaining shareholders. That structure, common at media companies, creates dysfunction, he said, by giving founders far more clout than their share ownership would otherwise provide. At Emmis, for instance, Smulyan owns 20 percent of the shares but controls 64 percent of the votes.
“Dual classes of stock invite these sorts of issues, because you have separated control from ownership,” Elson said. “It makes it much more difficult for a board to operate in an independent fashion.”
Emmis spokeswoman Kate Snedeker said Smulyan’s compensation is in line with what top executives at similar radio companies earn. She said his pay reflects the recovery of the company’s stock price and a successful string of transactions that allowed Emmis to “get back on firm footing.”
Smulyan also has played a leadership role in the radio industry—recently negotiating, for instance, a groundbreaking deal to include FM radio tuners in Sprint mobile phones.
“In the view of the comp committee, his compensation package was well-earned,” Snedeker said.
Among the critics of Smulyan’s pay are preferred shareholders who are suing Emmis over a plan it completed last year that stripped them of the right to collect millions of dollars in unpaid dividends.
In a May deposition, an attorney for the preferred holders asked Smulyan whether he had taken on additional responsibilities that would justify the 22-percent increase in compensation he received in the fiscal year ending in February 2012.
Smulyan offered no apologies.
“Well, I think the biggest responsibility was saving the company,” Smulyan responded.
“I think that going through the fallout of the greatest downturn in the history of the American media industry would be an increase of responsibilities for anyone employed in the American media industry in 2011.”
Finish Line CEO’s mea culpa
Finish Line Inc. executives were contrite Jan. 4 when they fielded questions from analysts about the company’s unsuccessful launch of a new website just four days before Black Friday. As IBJ reported last month, customer complaints and glitches forced the company to do an about-face and revert to the legacy website Dec. 6.
“Hindsight says launching the website in November was a huge mistake,” CEO Glenn Lyon said. “We had so much confidence built into the fact that this platform was going to improve our business, never thinking that it could be decreasing our business.”
He added: “Our leadership team is challenged by this, and I constantly use the expression around here that we need to be confident but we can’t be cocky. And the fact is, we might have gotten a little out on our skis here.”•